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Using A Northtown Lexus Dealership That Received Taxpayer Dollars From An Industrial Development Agency To Move Its Business From One Side Of The Street To The Other In Suburban Buffalo, Area Activists Join Organized Labor In Calling For IDA Reforms

Published Friday, November 11, 2011 11:00 am
by The Coalition for Economic Justice & WNYLT Staff
Using A Northtown Lexus Dealership That Received Taxpayer Dollars From An Industrial Development Agency To Move Its Business From One Side Of The Street To The Other In Suburban Buffalo, Area Activists Join Organized Labor In Calling For IDA Reforms

WNYLaborToday.com Editor’s Note: Western New York AFL-CIO Area Labor Federation (WNYALF) Field Coordinator Patty DeVinney (pictured above) speaks at a news conference held outside the Northtown Lexus Dealership on Sheridan Drive in the Buffalo Suburb of Williamsville, which was called to focus attention on the need for Industrial Development Agency reforms.  Holding an umbrella over DeVinney’s head is Allison Duwe, Executive Director for the Coalition for Economic Justice, who also spoke at the news conference.  (Photo Courtesy Of The Coalition For Economic Justice)

 

(AMHERST) - Using the Northtown Lexus Dealership on Sheridan Drive in the Buffalo Suburb of Amherst as a backdrop to underscore the misuse of public dollars given out by Industrial Development Agencies (IDAs) that fail to create good jobs or promote broad community benefits, Organized Labor, Community Activists and members of Occupy Buffalo called for a number of reforms to ensure IDAs do not waste taxpayer dollars.

The rally in Amherst was one of several coordinated actions that occurred across New York State on Thursday (November 10th) that called for economic development reform.  The action also included a teach-in with Occupy Buffalo activists on the impact of economic development subsidies, which took place earlier in the afternoon at Niagara Square in Downtown Buffalo. 

The Getting Our Money’s Worth Coalition is a broad group of Public Policy Experts, Government Watchdogs, Labor Unions, Community and Religious Organizations, as well as concerned small business owners, Workers and taxpayers.  The statewide coalition is anchored by ALIGN: The Alliance for a Greater New York and the Buffalo-based Coalition for Economic Justice (CEJ).

The event was the second such held in Western New York in recent weeks.  In mid October, the Niagara-Orleans AFL-CIO Central Labor Council held a news conference in Niagara Falls to unveil a new 75-page IDA Report entitled, Generating Waste:Problems With NYPA And The IDAs And How To Solve Them, which called attention to IDAs that use taxpayer dollars to fund construction of auto dealerships, hotels and supermarkets that work to create low-paying jobs and fail to adhere to safety standards that have caused on-the-job deaths and injuries.  At that press conference, Niagara-Orleans Labor Council President James Briggs said elected representatives must also be held accountable in order to bring about needed change.

In Amherst, Northtown Automotive Companies was singled out for receiving a subsidy of $536,000 from the Amherst IDA to move its Lexus dealership from 3930 Sheridan Drive from across the street to 3845 Sheridan Drive.  Despite guidelines for IDAs in Erie County making auto dealerships ineligible for tax breaks, the Amherst IDA granted $245,000 in sales tax breaks, $213,968 in property tax breaks and $77,000 in mortgage recording tax breaks.

“We could be using our economic development subsidies to create quality jobs and other opportunities so our region can thrive,” Western New York AFL-CIO Area Labor Federation (WNYALF) Field Coordinator Patty DeVinney said at the news conference. 

“Western New York’s 14 IDAs have ‘given away’ $48.5 million in net tax exemptions in 2009 alone, said DeVinney, who added: “With that money we could fund the education of over twenty-six-hundred students for one year or retrofit over thirty-seven-hundred small businesses for energy efficiency, save millions of dollars in energy costs and employ nearly eight-hundred Workers in the construction industry.”

Meanwhile, CEJ Executive Director Allison Duwe cited a new report, Regional Review: Job Creation and New York’s Industrial Development Agencies, which highlights consistent problems with economic development activities across New York State.

“The Amherst IDA, along with IDAs in Western New York and across the State, consistently hand-out tax breaks to companies that don’t promote real economic growth.  All Erie County residents are impacted by this deal because the IDA gave this Lexus Dealership a break on its county property taxes.  We need performance standards, accountability measures and transparency reforms to ensure that IDAs do not waste taxpayer dollars.  We’re not opposed to subsidies if they support companies that are helping to build a better future, but this deal is ludicrous,” Duwe said.

Lynn Diagostino, a Buffalo-area school Teacher, also spoke at the news conference and said: “Reckless spending by IDAs on projects like this Lexus Dealership has a tremendous impact on our communities in Western New York and throughout the State that lose out on tax revenues and struggle with job cuts and public service cuts.  What’s more important, educating our children and retaining good jobs in education or supporting a luxury car dealership?”

To review the Regional Report: Job Creation and New York’s Industrial Development Agencies, which features several Subsidy Snapshots of Western New York and the Southern Tier, visit http://www.alignny.org/posts/resource/2011/11/regional-review-job-creation-and-industrial-development-agencies/.

 

WNYLaborToday.com Editor’s Note: Your Regional, On-Line Labor Newspaper published the following Labor News Story on the Generating Waste Study in mid October:

IDA & NYPA-Financed Projects Come Under Fire With Release Of New Report/Labor Joins With Community Activists To Focus Spotlight On Area Projects That Create Poverty-Level Jobs & Unsafe Working Conditions That Take Lives And Cause Injuries

(NIAGARA FALLS) – Industrial Development Agencies (IDAs) that use taxpayer dollars to fund construction of auto dealerships, hotels and supermarkets that work to create low-paying jobs and fail to adhere to safety standards that have caused on-the-job deaths and injuries must be stopped and our elected representatives must be held accountable in order to bring about change, Niagara-Orleans AFL-CIO Central Labor Council President James Briggs said during a Niagara Falls news conference that unveiled a new 75-page IDA Report entitled, Generating Waste: Problems With NYPA And The IDAs And How To Solve Them.

The study was commissioned by the Niagara-Orleans Central Labor Council and was conducted by The Partnership for the Public Good (PPG), which was also produced in coordination with the Coalition for Economic Justice (CEJ).  The report focuses on numerous and wasteful projects by not only IDAs across Western New York and New York State, but through the New York State Power Authority (NYPA), which Briggs says – in essence – wastes taxpayer-funded subsidies.

Representatives of Organized Labor, including several from the Niagara County Building & Construction Trades Council, were joined by officials from the Western New York Area AFL-CIO Labor Federation (WNYALF) , the PPG, the CEJ, the Western New York Council on Occupational Safety & Health (WNYCOSH) and the Niagara County-based, Faith-Based Niagara Organizing Alliance for Hope (NOAH) organizing group, at the news conference that was held on Tuesday (October 12th) outside the Holiday Inn Express & Suites on Niagara Falls Boulevard in Niagara Falls. 

The Holiday Inn Express site was chosen for several reasons, officials said, including the fact the Niagara County IDA-financed project has created what was described as “just above poverty wage level jobs,” and that it was the scene of a non-Union Construction being killed on the job and another who was severely injured due to unsafe working conditions.

“Between 2003 and 2009, IDAs gave out three-point-three-billion dollars in tax exemptions, which could have created one-hundred-and-twenty-thousand jobs if gone to direct job creation.  But you can’t rebuild a hurting economy on low-wage jobs (that IDA projects help fund),” Niagara-Orleans CLC President Briggs said. 

“We’re here today to also announce that we are all working together to ensure economic development that creates a good economy that ‘all’ of Western New York needs.  The ‘elephant’ in the room are IDAs and we intend to hold our elected officials accountable in the voting booth.  We need to put an end to projects like the Holiday Inn Express.  It is time to hold the individuals giving away our money accountable.  This money is spent in the name of job creation, but it isn’t creating the good jobs our communities need.  It’s time the people in our community have a voice!  They want jobs! Good-paying jobs so they can feed their families,” Briggs added.

Retired WNYCOSH Director Roger Cook, who also spoke at the news conference, said the $2 million, IDA-financed Holiday Inn Express project that was financed back in 2007 for Developer Mohan Saran took the life of an out-of-town, North Carolina Construction Worker who fell 26 feet to his death.  Another Worker suffered a “shattered leg” in an on-site accident.  The Federal Occupational Safety & Health Administration (OSHA) investigated and subsequently fined the Georgia Contractor hired to build the Holiday Inn Express $40,000 for Unsafe Working Conditions, Cook added.

“What makes me so angry is that (Saran) received nearly two-million dollars in various tax breaks from the IDA, but didn’t use this money as taxpayers would expect to create local jobs. Instead, he hired a construction firm from Georgia that didn’t properly train its Workers and cut corners with respect to safety.  Those cut corners cost a Worker his life.  This was a preventable tragedy.  There are highly-skilled Construction Workers eager for employment right here in Niagara County.  This employer could have instead hired well-trained and experienced local Niagara County Construction Workers instead of bringing Workers in from out of town.  We need safe employers and contractors on these projects.  Our IDAs need to reign in the waste and hold developers accountable,” Cook said.

PPG Co-Director Sam Magavern, meanwhile, underscored the fact that subsidizing the construction of projects like the Holiday Inn Express “pits one hotel against another” and in the long run does nothing for the local economy.  “It’s meaningless,” said Magavern, who stressed that a company like Holiday Inn does not need public/taxpayer assistance to build its hotels - and that in the end, IDA-financed projects are “subsidizing poverty-level jobs.” 

“Unemployment and underemployment remain stubbornly high.  Economic inequality continues to increase.  New York State faces severe budgetary challenges and has slashed spending in most sectors of State Government.  Now, more than ever, New Yorkers need to take a close look at the State’s spending on economic development and the results that it is yielding.  Currently, we’re spending too much on ‘corporate welfare programs’ that just re-slice the pie without growing it.  We’re subsidizing too many hotels, restaurants, medical offices, and car dealerships – subsidies that don’t add jobs to the region.  They just give one business an unfair advantage over its competitors.  Meanwhile, we’ve let NYPA get away with shortchanging Western New York on our low-cost power allocations,” Magavern added.

According to the representatives at the news conference, there are 115 IDAs across the State.  But the Generating Waste Study (which can be directly accessed on-line at http://www.ppgbuffalo.org/new-report-on-economic-development-in-nys/) focuses on the three most active Industrial Development Agencies across the Western New York Region: Niagara County, Erie County and another in the Erie County Town of Amherst, as well as NYPA. 

The total of nine IDAs in Erie and Niagara County are all separate public benefit corporations that are authorized by the State to provide sales, property and mortgage recording tax exemptions to businesses.  The operating expenses of each IDA - which has its own board, staff, legal representation and consultants - are generated based on fees that businesses pay based on the size of the tax break the IDA is able to deliver.  In 2010, there were 71 projects funded by IDAs in Niagara/Erie Counties, including a supermarket in the Town of Clarence (Erie County) and two more supermarkets in Amherst, Magavern said.

Meanwhile, NYPA is the largest, publicly-owned utility in the Nation and provides New York with more than one quarter of its electricity, while operating more than 1,400 miles of transmission lines.  Run by a board that’s appointed by the governor, NYPA owns 17 power plants that supply about one-fourth of the State’s electricity needs. 

NYPA is also an unusual government entity in that it tends to run a profit.  In 2010, NYPA reported net income of $181 million.  “They use their excess power as subsidies for economic development and (Western New York Taxpayers) aren’t getting low-cost power out of this.  NYPA also does not pay any property taxes.  We need to return to the old notion of economic development and spend this money and power on economically-good projects,” Magavern said.

According to the study, the area’s IDAs are not helping grow Western New York’s economy by luring new business into the region.  Of the 71 tax exemption deals that the IDAs of Niagara County, Erie County and Amherst did in 2010, the study showed that only one appeared to involve a company that actually relocated to our area from out of state.  All other deals appeared to be expansions or relocations by companies that were already in the region.

On another front, Governor Andrew Cuomo’s new Regional Economic Development Council initiative came up several times throughout the press event.  The governor has created a total of 10 Regional Councils, which are each charged with developing a strategic plan for their areas by November 14th in order to help guide roughly $1 billion in State money that has been targeted for economic development.

“The goal of the report is not just to recommend changes to both NYPA and the IDAs, but also to draw conclusions that are widely applicable to economic development efforts and that can help to guide the Regional Economic Development Councils as they craft their plans and criteria,” Magavern said.  “We’re hopeful that this report helps guide our economic development decisions in a new, more positive direction.”

NOAH Representative Mark Meloon also spoke at the news conference and shared with those in attendance the frustration of what he sees as too many deals that don’t provide good jobs to local residents.  “There are one-hundred-and-fifteen IDAs across the State, including three right here in Niagara County.  We’re standing outside of a project (the Holiday Inn Express) that benefitted from public money.  My family, my community is paying for this.  Yet, as we’ve heard – the only jobs that are benefitting the local community as a result of this project are a handful of low-wage hospitality jobs.  We can do better.  It’s time to start getting our money’s worth.”

CEJ Executive Director Allison Duwe echoed Meloon’s comments.

“Are we getting our money’s worth from the multitude of IDAs?  No, we are not.  Unemployment is high and we are in a ‘real’ job crisis.  We’re spending more than eight-billion dollars a year in New York State on economic development.  We need to start getting a ‘real return’ on our money.  We need a high-performance plan that funds the best packages,” she said.

 

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